Shares in telecoms giant BT fell this morning as the company announced it was holding back £2 billion to try and tackle its swelling pension deficit.

BT shares helped to dampen the mood in London trading this morning as the FTSE opened flat. BT was one of the five biggest fallers this morning, down 2% to 419p as the market reacted to the unexpectedly high pension deficit.

The company reported the pension deficit has grown to £7 billion from £4 billion in 2012, as it reported its Q3 results.

Despite profits increasing 12% to £694 million in Q3 investors were unimpressed by the £2 billion put aside to start paying down the deficit and news that it was part of a 16-year recovery plan.

Gavin Patterson, chief executive of BT, said: the plan reflected ‘the strength and sustainability of our future cash flow generation’ and that BT, which is in exclusive talks to acquire mobile provider EE, had had its best ever quarter for some areas of the business.

‘Openreach [BT’s landline operation] achieved the highest growth in the number of landlines on record,’ said Patterson, adding that it was also the best ever quarter for fibre broadband.

Ian Forrest, investment research analyst at The Share Centre, gave a ‘buy’ recommendation to BT shares on the news.

‘In its Q3 results reported this morning, BT comfortably beat expectations reporting a 13% rise in pre-tax profit. The group’s key consumer division achieved a 15% rise in broadband and television sales, which included its best ever quarter for growth in its fibre broadband products. The news that the company is also planning to roll out ultrafast broadband with speeds up to 500Mbps to most of the UK within a decade, also shows it is responding to demand from its customers and technological changes,’ he said.

‘The company announced it is making good progress with the due diligence process for the potential £12.5bn acquisition of mobile network EE, but that news was overshadowed by reports of an increase in the group’s pension deficit to £7bn which may hamper its ability to bid for football television rights.

‘We continue to recommend BT as a ‘buy’ for medium-risk investors. The company continues to see strong demand for its products, the valuation is attractive and the healthy cash flow should lead to a steady increase in dividends over the next few years.’